There is asymmetric information in the used car market because sellers cannot distinguish between lemons (low-quality) and plums (high-quality), but buyers can.
Answer the following statement true (T) or false (F)
False
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The equilibrium level of aggregate planned expenditure is found where
A) there is no saving and no dissaving. B) net exports is zero. C) aggregate planned expenditure equals real GDP. D) autonomous expenditure equals equilibrium expenditure. E) the price level is rising at a constant rate.
If good weather conditions result in a larger than normal crop of peaches, then the
A) equilibrium price of peaches rises, and the equilibrium quantity of peaches increases. B) equilibrium price of peaches falls, and the equilibrium quantity of peaches increases. C) demand curve for peaches shifts leftward. D) increase in the supply of peaches induces a greater demand for peaches, so that the equilibrium price rises and the equilibrium quantity increases. E) equilibrium price of peaches falls, and the equilibrium quantity of peaches decreases.
A manager believes there is a 10 percent chance their firm will have to pay $500,000, a 20 percent chance that they will have to pay $400,000 and a 70 percent chance they will be found innocent and pay nothing except the legal fees of $100,000. If the manager chooses to not enter into the litigation and to settle for $230,000 (pay the plaintiff), which of the following is true?
A) The manager is risk intolerant. B) The manager is a risk lover. C) The manager is risk neutral. D) The manager is risk averse.
The U.S. exchange rate has:
A. slightly fluctuated over the past 30 years. B. been fixed during the past 30 years. C. significantly fluctuated over the past 30 years. D. appreciated over the past 5 years.